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Without state aid, MBTA GM eyes more fare hikes

By Matt Murphy, State House News Service

Updated:
03/20/2013 09:20:10 AM EDT

BOSTON -- Uncertain about the Legislature's timetable and preference for addressing the state's long-term transit- financing needs, MBTA General Manager Beverly Scott is leaning toward a budget solution reliant most heavily on increased fare revenue to close a $117 million budget gap.

Scott told members of the MassDOT Board Tuesday that reducing bus service is the "simplest and most cost-effective" way to squeeze savings out of the MBTA system, but said it also impacts the poorest and most transit dependent citizens in the state.

"If we're talking one-time bridge, I will tell you in terms of final recommendation, there's going to be more leaning toward fare because of exactly that set of tensions that we have going on," Scott said, adding that increased fares are also the most easily reversed if the Legislature identifies new revenue for the agency.

After closing a budget gap last year with fare hikes and state bailout funds, the MBTA is facing an April 10 deadline to have a fiscal 2014 budget in place that addresses this year's $117 million budget gap.

Charles Planck, senior director of strategic initiatives and performance at the MBTA, estimated that an average fare increase of between 27 percent and 33 percent would be needed across all modes of transportation to generate $130 million, or between 13 percent and 15 percent to net $65 million in new revenue. The MBTA raised fares on average of 23 percent last year to close its fiscal 2013 budget gap, an increase that dented the personal budgets of riders but which did not produce a drop in ridership that had been predicted, in part due to high gas prices.

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Though there is some appetite in the House and Senate to advance a transportation-financing solution that would address that budget gap, the MBTA must still prepare for the possibility of no new funding.

"I've lived too many lives, and so until you actually have the dollars I presume nothing," said Scott, who came to Boston from Atlanta where she ran the transit system. "I just left a place where I had to take buses down from 131 to 91 routes, reduce 10.2 percent in terms of rail service and wound up doing significant increases and laying off and reducing staff by 750 positions."

Scott's comment came at a meeting of the MassDOT Finance and Audit Committee Tuesday where MBTA officials updated the board on their latest thinking for a fiscal 2014 budget solution. A final recommendation to close the gap could come next Thursday when the committee meets.

MBTA Chief Financial Officer Jonathan Davis said he has identified $75.5 million in one-time revenues that could help shrink the gap, but would also take away from the MBTA capital maintenance program and build in a certain deficit next year without new revenue.

Davis proposed taking $45 million in additional federal maintenance funds out of the capital program to cover operating expenses, and said the T expects a $13 million surplus this year that could be carried over to fiscal 2014. He also suggested deferring a $5 million contribution to its retiree health benefit liability, and applying to the operating budget $5 million in funding from the lease of the North Station parking garage, $3.1 million from legal settlements, and $4.5 million in property sales all earmarked now for capital improvements.

Those steps, according to Davis, could shrink the budget gap for the coming fiscal year to just under $42 million, but Scott described the steps as "bleeding the wrist" of the agency that would impact its ability to maintain the bus, subway and commuter rail system.

"The cost is not doing all the states of good repair projects that benefit our customers, benefit the system and improves reliability," Davis said.

The remaining gap would have to be closed with fare increases, service cuts or a blend of both.

Charles Planck, senior director of strategic initiatives and performance at the MBTA, presented the boards with options for service cuts and bus fare increases that could save over $27 million, but would require eliminating 41 weekday bus routes, bus service after 8 p.m., RIDE service after 8 p.m. and ferry subsidies.

"Be real, we're never going to do that. Why is it even on the list?" MassDOT Board Chairman John Jenkins said, referring to the elimination of all bus service after 8 p.m. that could save an estimated $8.5 million.

"We don't want to do any of them," Scott responded.

Board member Ferdinand Alvaro also questioned why the MBTA would consider raising bus fares to be in line with subway fares before considering raising commuter rail fares, whose customers are typically more affluent and able to pay than bus riders.

Planck said that if the Legislature does not approve a significant, long-term new revenue stream for the MBTA this year, the agency would have to start considering later this year a more permanent "resizing" of the transit system that could be sustained with current funding levels.

"They're not the kind of actions that can be taken year after year," Planck said.

John Robinson, of Massachusetts Senior Action Council, told the board that last year's decision to double the cost of a fare on the RIDE from $2 to $4 has limited access to public transit for many seniors and disabled riders. He said Mass Senior Action is planning a "speak out" in the transportation building next Thursday to coincide with the next committee meeting.

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